By: Johnathon Fox

Today's quick article is going to cover two very simple price action reversal
signals that any trader can learn and start spotting today. These two signals
are not complicated and even the newest of traders will be able to start
spotting them all over their charts.

Pin Bar ReversalI have covered in previous articles
exactly what goes into making a Pin Bar a valid signal. Basically a Pin Bar is a
candle that has a small body and a large nose that is rejecting either higher or
lower prices. The thinking behind the Pin Bar is quite simple; Price has moved
higher or lower before a wave of orders snaps price back in the other direction.
See the chart below for what a Pin Bar looks like:

Where the Pin Bar forms. Does it form in a range or in a nice trending
market?

Is there space for price to move into when price breaks the low or high of
the Pin Bar?

Is the Pin Bar rejecting a logical support or resistance area

Learning all the factors that goes into making one signal better than the
other is all part of the education process for price action traders.

Pin Bars form regularly, however, as traders we only want to be taking the
very best signals that form at the very best areas. A recent example of a
quality Pin Bar is attached below. Notice in the example price was rejecting a
logical resistance area and the Pin Bar stuck out away from all other price.

Click to Enlarge

Bullish and Bearish Engulfing BarsEngulfing Bars are
very obvious price action signals that are momentum trades. Quite often
engulfing bars will be massive in range and one of the largest candles on the
chart. A lot of traders become worried about large price action signals, where
instead they should be getting excited. Large engulfing bars are showing a large
shift in momentum and the bigger the better. Engulfing Bars are really easy to
spot and identify.

Just like the Pin Bar and other price action signals, not all Engulfing Bars
are created equal. The same factors that go into looking for the best Pin Bars
are also valid for the Engulfing Bar. We need to see them sticking out and
screaming at us that price wants to reverse. What I mean when I say "screaming
at us" is many traders will get caught out trying to spot signals when they are
simply not there. The best signals are always when they are really obvious, and
as soon as you flick to that chart they stick out like a sore thumb! Stick to
the really obvious and simple Engulfing Bars and avoid trying to trade something
you have to search really hard to find.